For investors, managing the risks associated with investment decisions is a challenging task in a perpetually changing global marketplace. An experienced investor understands the impact of risk on the performance of an investment portfolio and appreciates that that risk must be duly considered when modifying the composition of the portfolio.
Historically, financial services firms have collected a wide variety of market performance data and have developed complex indices, extensive financial models, and other intricate analysis tools to assist investors in making investment decisions. However, these analysis tools are often too complicated and difficult for investors to understand and implement effectively in connection with making investment decisions. In addition, many existing financial models and financial indices do not adequately factor demand for risky assets into their calculations. Lack of sufficient consideration of risk or risk demand in investment decisions can limit the potential for returns on investments in a portfolio.
In view of these problems, more effective and efficient financial tools are needed for analyzing market data and for developing investment strategies for investors.